Jacob Lewis v. Epic Systems Corporation

Epic Systems, a health care software

company, required certain groups of employees to agree to

bring any wage-and-hour claims against the company only

through individual arbitration. The agreement did not permit

* Of the Northern District of Illinois, sitting by designation.

2 No. 15-2997

collective arbitration or collective action in any other forum.

We conclude that this agreement violates the National Labor

Relations Act (NLRA), 29 U.S.C. §§ 151, et seq., and is also unenforceable

under the Federal Arbitration Act (FAA), 9 U.S.C.

§§ 1, et seq. We therefore affirm the district court’s denial of

Epic’s motion to compel arbitration.

I

On April 2, 2014, Epic Systems sent an email to some of its

employees. The email contained an arbitration agreement

mandating that wage-and-hour claims could be brought only

through individual arbitration and that the employees

waived “the right to participate in or receive money or any

other relief from any class, collective, or representative proceeding.”

The agreement included a clause stating that if the

“Waiver of Class and Collective Claims” was unenforceable,

“any claim brought on a class, collective, or representative action

basis must be filed in a court of competent jurisdiction.”

It also said that employees were “deemed to have accepted

this Agreement” if they “continue[d] to work at Epic.” Epic

gave employees no option to decline if they wanted to keep

their jobs. The email requested that recipients review the

agreement and acknowledge their agreement by clicking two

buttons. The following day, Jacob Lewis, then a “technical

writer” at Epic, followed those instructions for registering his

agreement.

Later, however, Lewis had a dispute with Epic, and he did

not proceed under the arbitration clause. Instead, he sued

Epic in federal court, contending that it had violated the Fair

Labor Standards Act (FLSA), 29 U.S.C. §§ 201, et seq. and Wisconsin

law by misclassifying him and his fellow technical

writers and thereby unlawfully depriving them of overtime

No. 15-2997 3

pay. Epic moved to dismiss Lewis’s claim and compel individual

arbitration. Lewis responded that the arbitration clause violated

the NLRA because it interfered with employees’ right

to engage in concerted activities for mutual aid and protection

and was therefore unenforceable. The district court agreed

and denied Epic’s motion. Epic appeals, arguing that the district

court erred in declining to enforce the agreement under

the FAA. We review de novo a district court’s decision to deny

a motion to compel arbitration. Gore v. Alltel Commc’ns, LLC,

666 F.3d 1027, 1033 (7th Cir. 2012).

II

A

Section 7 of the NLRA provides that “[e]mployees shall

have the right to self-organization, to form, join, or assist labor

organizations, to bargain collectively through representatives

of their own choosing, and to engage in other concerted activities

for the purpose of collective bargaining or other mutual

aid or protection.” 29 U.S.C. § 157. Section 8 enforces Section

7 unconditionally by deeming that it “shall be an unfair labor

practice for an employer ... to interfere with, restrain, or coerce

employees in the exercise of the rights guaranteed in [Section

7].” Id. § 158(a)(1). The National Labor Relations Board is “empowered

... to prevent any person from engaging in any unfair

labor practice ... affecting commerce.” Id. § 160(a).

Contracts “stipulat[ing] ... the renunciation by the employees

of rights guaranteed by the [NLRA]” are unlawful and

may be declared to be unenforceable by the Board. Nat’l Licorice

Co. v. NLRB, 309 U.S. 350, 365 (1940) (“[I]t will not be open

to any tribunal to compel the employer to perform the acts,

which, even though he has bound himself by contract to do

4 No. 15-2997

them, would violate the Board’s order or be inconsistent with

any part of it[.]”); J.I. Case Co. v. NLRB, 321 U.S. 332, 337 (1944)

(“Wherever private contracts conflict with [the Board’s] functions,

they obviously must yield or the [NLRA] would be reduced

to a futility.”). In accordance with this longstanding

doctrine, the Board has, “from its earliest days,” held that

“employer-imposed, individual agreements that purport to

restrict Section 7 rights” are unenforceable. D. R. Horton, Inc.,

357 N.L.R.B. No. 184 at *5 (2012) (collecting cases as early as

1939), enf’d in part and granted in part, D.R. Horton, Inc. v. NLRB,

737 F.3d 344 (5th Cir. 2013). It has done so with “uniform judicial

approval.” Id. (citing as examples NLRB v. Vincennes

Steel Corp., 117 F.2d 169, 172 (7th Cir. 1941), NLRB v. Jahn &

Ollier Engraving Co., 123 F.2d 589, 593 (7th Cir. 1941), and

NLRB v. Adel Clay Products Co., 134 F.2d 342 (8th Cir. 1943)).

Section 7’s “other concerted activities” have long been held

to include “resort to administrative and judicial forums.”

Eastex, Inc. v. NLRB, 437 U.S. 556, 566 (1978) (collecting cases).

Similarly, both courts and the Board have held that filing a

collective or class action suit constitutes “concerted activit[y]”

under Section 7. See Brady v. Nat’l Football League, 644 F.3d 661,

673 (8th Cir. 2011) (“[A] lawsuit filed in good faith by a group

of employees to achieve more favorable terms or conditions

of employment is‘concerted activity’ under § 7 of the National

Labor Relations Act.”); Altex Ready Mixed Concrete Corp. v.

NLRB, 542 F.2d 295, 297 (5th Cir. 1976) (same); Leviton Mfg. Co.

v. NLRB, 486 F.2d 686, 689 (1st Cir. 1973) (same); Mohave Elec.

Co-op., Inc. v. NLRB, 206 F.3d 1183, 1189 (D.C. Cir. 2000) (single

employee’s filing of a judicial petition constituted “concerted

action” under NLRA where “supported by fellow employees”);

D. R. Horton, 357 N.L.R.B. No. 184, at *2 n.4 (collecting

cases). This precedent is in line with the Supreme Court’s rule

No. 15-2997 5

recognizing that even when an employee acts alone, she may

“engage in concerted activities” where she “intends to induce

group activity” or “acts as a representative of at least one

other employee.” NLRB v. City Disposal Systems, Inc., 465 U.S.

822, 831 (1984).

Section 7’s text, history, and purpose support this rule. In

evaluating statutory language, a court asks first “whether the

language at issue has a plain and unambiguous meaning with

regard to the particular dispute in the case.” Exelon Generation

Co., LLC v. Local 15, Int’l Bhd. of Elec. Workers, AFL-CIO, 676

F.3d 566, 570 (7th Cir. 2012). In doing so, it “giv[es] the words

used their ordinary meaning.” Lawson v. FMR LLC, 134 S. Ct.

1158, 1165 (2014) (internal citation omitted). “Absent a clearly

expressed legislative intention to the contrary, that language

must ordinarily be regarded as conclusive.” Consumer Prod.

Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980).

The NLRA does not define “concerted activities.” The ordinary

meaning of the word “concerted” is: “jointly arranged,

planned, or carried out; coordinated.” Concerted, NEW OXFORD

AMERICAN DICTIONARY 359 (3d ed. 2010). Activities are

“thing[s] that a person or group does or has done” or “actions

taken by a group in order to achieve their aims.” Id. at 16. Collective

or class legal proceedings fit well within the ordinary

understanding of “concerted activities.”

The NLRA’s history and purpose confirm that the phrase

“concerted activities” in Section 7 should be read broadly to

include resort to representative, joint, collective, or class legal

remedies. (There is no hint that it is limited to actions taken

by a formally recognized union.) Congress recognized that,

before the NLRA, “a single employee was helpless in dealing

6 No. 15-2997

with an employer,” and “that union was essential to give laborers

opportunity to deal on an equality with their employer.”

NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 33

(1937). In enacting the NLRA, Congress’s purpose was to “to

equalize the bargaining power of the employee with that of

his employer by allowing employees to band together in confronting

an employer regarding the terms and conditions of

their employment.” City Disposal Systems, 465 U.S. at 835.

Congress gave “no indication that [it] intended to limit this

protection to situations in which an employee’s activity and

that of his fellow employees combine with one another in any

particular way.” Id.

Collective, representative, and class legal remedies allow

employees to band together and thereby equalize bargaining

power. See Phillips Petrol. Co. v. Shutts, 472 U.S. 797, 809 (1985)

(noting that the class action procedure allows plaintiffs who

would otherwise “have no realistic day in court” to enforce

their rights); Harry Kalven, Jr. & Maurice Rosenfield, The Contemporary

Function of the Class Suit, 8 U. CHI. L. REV. 684, 686

(1941) (noting that class suits allow those “individually in a

poor position to seek legal redress” to do so, and that “an effective

and inclusive group remedy” is necessary to ensure

proper enforcement of rights). Given Section 7’s intentionally

broad sweep, there is no reason to think that Congress meant

to exclude collective remedies from its compass.

Straining to read the term through our most Epic-tinted

glasses, “concerted activity” might, at the most, be read as

ambiguous as applied to collective lawsuits. But even if Section

7 were ambiguous—and it is not—the Board, in accordance

with the reasoning above, has interpreted Sections 7 and

No. 15-2997 7

8 to prohibit employers from making agreements with individual

employees barring access to class or collective remedies.

See D. R. Horton, 357 N.L.R.B. No. 184, at *5. The Board’s

interpretations of ambiguous provisions of the NLRA are “entitled

to judicial deference.” Lechmere, Inc. v. NLRB, 502 U.S.

527, 536 (1992). This Court has held that the Board’s views are

entitled to Chevron deference, see Int’l Ass’n of Machinists &

Aerospace Workers v. NLRB, 133 F.3d 1012, 1015 (7th Cir. 1998),

and the Supreme Court has repeatedly cited Chevron in describing

its deference to the NLRB’s interpretation of the

NLRA, see, e.g., Lechmere, 502 U.S. at 536; NLRB v. United Food

& Commercial Workers Union, Local 23, AFL-CIO, 484 U.S. 112,

123 (1987). The Board’s interpretation is, at a minimum, a sensible

way to understand the statutory language, and thus we

must follow it.

Epic argues that because the Rule 23 class action procedure

did not exist in 1935, when the NLRA was passed, the

Act could not have been meant to protect employees’ rights to

class remedies. See FED. R. CIV. P. 23 (Committee Notes describing

the initial 1937 version of the rule and later amendments).

We are not persuaded. First, by protecting not only

employees’ “right to self-organization, to form, join, or assist

labor organizations, [and] to bargain collectively through representatives

of their own choosing” but also “other concerted

activities for the purpose of ... other mutual aid or protection,”

Section 7’s text signals that the activities protected are to be

construed broadly. 29 U.S.C. § 157 (emphasis added); see City

Disposal Systems, 465 U.S. at 835. There is no reason to think

that Congress intended the NLRA to protect only “concerted

activities” that were available at the time of the NLRA’s enactment.



8 No. 15-2997

Second, the contract here purports to address all collective

or representative procedures and remedies, not just class actions.

Rule 23 may have been yet to come at the time of the

NLRA’s passage, but it was not written on a clean slate. Other

class and collective procedures had existed for a long time on

the equity side of the court: permissive joinder of parties, for

instance, had long been part of Anglo-American civil procedure

and was encouraged in 19th-century federal courts.

CHARLES ALAN WRIGHT & ARTHUR R. MILLER, 7 FEDERAL

PRACTICE AND PROCEDURE § 1651 (3d ed. 2015) (noting that

federal equity courts encouraged permissive joinder of parties

as early as 1872). As early as 1853, it was “well established”

that representative suits were appropriate “where the

parties interested are numerous, and the suit is for an object

common to them all.” Smith v. Swormstedt, 57 U.S. 288, 302

(1853) (allowing representative suit on behalf of more than

1,500 Methodist preachers). In fact, representative and collective

legal procedures have been employed since the medieval

period. See STEPHEN C. YEAZELL, FROM MEDIEVAL GROUP

LITIGATION TO THE MODERN CLASS ACTION 38 (1987) (discussing

group litigation in England occurring as early as 1199

C.E.). The FLSA itself provided for collective and representative

actions when it was passed in 1938. See, e.g., Williams v.

Jacksonville Terminal Co., 315 U.S. 386, 390 n.3 (1942) (allowing

suits by employees on behalf of “him or themselves and other

employees similarly situated” (quoting FLSA, 29 U.S.C.

§ 216(b))).

Congress was aware of class, representative, and collective

legal proceedings when it enacted the NLRA. The plain language

of Section 7 encompasses them, and there is no evidence

that Congress intended them to be excluded. Section 7’s

No. 15-2997 9

plain language controls, GTE Sylvania, 447 U.S. at 108, and

protects collective legal processes. Along with Section 8, it

renders unenforceable any contract provision purporting to

waive employees’ access to such remedies.

B

The question thus becomes whether Epic’s arbitration provision

impinges on “Section 7 rights.” The answer is yes.

In relevant part, the contract states “that covered claims

will be arbitrated only on an individual basis,” and that employees

“waive the right to participate in or receive money or

any other relief from any class, collective, or representative

proceeding.” It stipulates that “[n]o party may bring a claim

on behalf of other individuals, and any arbitrator hearing [a]

claim may not: (i) combine more than one individual’s claim

or claims into a single case; (ii) participate in or facilitate notification

of others of potential claims; or (iii) arbitrate any form

of a class, collective or representative proceeding.” It notes

that “covered claims” include any “claimed violation of wageand-hour

practices or procedures under local, state, or federal

statutory or common law.” It thus combines two distinct

rules: first, any wage-and-hour dispute must be submitted to

arbitration rather than pursued in court; and second, no matter

where the claim is brought, the plaintiff may not take advantage

of any collective procedures available in the tribunal.

Insofar as the second aspect of its provision is concerned,

Epic’s clause runs straight into the teeth of Section 7. The provision

prohibits any collective, representative, or class legal

proceeding. Section 7 provides that “[e]mployees shall have

the right to ... engage in ... concerted activities for the purpose

of collective bargaining or other mutual aid or protection.” 29

10 No. 15-2997

U.S.C. § 157. A collective, representative, or class legal proceeding

is just such a “concerted activit[y].” See Eastex, 437

U.S. at 566; Brady, 644 F.3d at 673; D. R. Horton, 357 N.L.R.B.

No. 184, at *2–3. Under Section 8, any employer action that

“interfere[s] with, restrain[s], or coerce[s] employees in the

exercise of the rights guaranteed in [Section 7]” constitutes an

“unfair labor practice.” 29 U.S.C. § 158(a)(1). Contracts that

stipulate away employees’ Section 7 rights or otherwise require

actions unlawful under the NRLA are unenforceable.

See Nat’l Licorice Co., 309 U.S. at 361; D. R. Horton, 357 N.L.R.B.

No. 184, at *5.

We are aware that the circuits have some differences of

opinion in this area, although those differences do not affect

our analysis here. The Ninth Circuit has held that an arbitration

agreement mandating individual arbitration may be enforceable

where the employee had the right to opt out of the

agreement without penalty, reasoning that the employer

therefore did not “interfere with, restrain, or coerce” her in

violation of Section 8. Johnmohammadi v. Bloomingdale's, Inc.,

755 F.3d 1072, 1077 (9th Cir. 2014). The Ninth Circuit’s decision

in Johnmohammadi conflicts with a much earlier decision

from this court, which held that contracts between employers

and individual employees that stipulate away Section 7 rights

necessarily interfere with employees’ exercise of those rights

in violation of Section 8. See NLRB v. Stone, 125 F.2d 752, 756

(7th Cir. 1942). Stone, which has never been undermined, held

that where the “employee was obligated to bargain individually,”

an arbitration agreement limiting Section 7 rights was a

per se violation of the NLRA and could not “be legalized by

showing the contract was entered into without coercion.” Id.

(“This is the very antithesis of collective bargaining.” (citing

NLRB v. Superior Tanning Co., 117 F.2d 881, 890 (7th Cir.

No. 15-2997 11

1940))). The Board has long held the same. See D.R. Horton,

357 N.L.R.B. No. 184, at *5–7 (citing J. H. Stone & Sons, 33

N.L.R.B. 1014 (1941) and Superior Tanning Co., 14 N.L.R.B. 942

(1939)). (In Johnmohammadi, the Ninth Circuit, without explanation,

did not defer to the Board.) We have no need to resolve

these differences today, however, because in our case, it

is undisputed that assent to Epic’s arbitration provision was

a condition of continued employment. A contract that limits

Section 7 rights that is agreed to as a condition of continued

employment qualifies as “interfer[ing] with” or “restrain[ing]

... employees in the exercise” of those rights in violation of

Section 8(a)(1). 29 U.S.C. § 157(a)(1).

In short, Sections 7 and 8 of the NLRA render Epic’s arbitration

provision unenforceable. Even if this were not the

case, the Board has found that substantively identical arbitration

agreements, agreed to under similar conditions, violate

Sections 7 and 8. See D. R. Horton, 357 N.L.R.B. No. 184; Murphy

Oil USA, Inc., 361 N.L.R.B. No. 72 (2014), enf’d in part and

granted in part, Murphy Oil USA, Inc. v. NLRB, 808 F.3d 1013

(5th Cir. 2015). We conclude that, insofar as it prohibits collective

action, Epic’s arbitration provision violates Sections 7 and

8 of the NLRA.

III

That would be all that needs to be said, were it not for the

Federal Arbitration Act. Epic argues that the FAA overrides

the labor law doctrines we have been discussing and entitles

it to enforce its arbitration clause in full. Looking at the arbitration

agreement, it is not clear to us that the FAA has anything

to do with this case. The contract imposes two rules: (1)

no collective action, and (2) proceed in arbitration. But it does

not stop there. It also states that if the collective-action waiver

12 No. 15-2997

is unenforceable, then any collective claim must proceed in

court, not arbitration. Since we have concluded in Part II of

this opinion that the collective-action waiver is incompatible

with the NLRA, we could probably stop here: the contract itself

demands that Lewis’s claim be brought in a court. Epic,

however, contends that we should ignore the contract’s saving

clause because the FAA trumps the NLRA. In essence,

Epic says that even if the NLRA killed off the collective-action

waiver, the FAA resuscitates it, and along with it, the rest of

the arbitration apparatus. We reject this reading of the two

laws.

In relevant part, the FAA provides that any written contract

“evidencing a transaction involving commerce to settle

by arbitration a controversy thereafter arising out of such contract

or transaction ... shall be valid, irrevocable, and enforceable,

save upon such grounds as exist at law or in equity for

the revocation of any contract.” 9 U.S.C. § 2. Enacted in “response

to judicial hostility to arbitration,” CompuCredit Corp.

v. Greenwood, 132 S. Ct. 665, 668 (2012), its purpose was “to

make arbitration agreements as enforceable as other contracts,

but not more so.” Prima Paint Corp. v. Flood & Conklin

Mfg. Co., 388 U.S. 395, 404 n.12 (1967). Federal statutory claims

are just as arbitrable as anything else, unless the FAA’s mandate

has been ‘overridden by a contrary congressional command.’”

CompuCredit, 132 S. Ct. at 669 (quoting Shearson/American

Express Inc. v. McMahon, 482 U.S. 220, 226

(1987)). The FAA’s “saving clause permits agreements to arbitrate

to be invalidated by ‘generally applicable contract defenses,’

... but not by defenses that apply only to arbitration or

that derive their meaning from the fact that an agreement to

arbitrate is at issue.” AT&T Mobility LLC v. Concepcion, 563

No. 15-2997 13

U.S. 333, 339 (2011) (quoting Doctor’s Associates, Inc. v. Casarotto,

517 U.S. 681, 687 (1996)).

Epic argues that the NLRA contains no “contrary congressional

command” against arbitration, and that the FAA therefore

trumps the NLRA. But this argument puts the cart before

the horse. Before we rush to decide whether one statute eclipses

another, we must stop to see if the two statutes conflict at

all. See Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515

U.S. 528, 533 (1995). In order for there to be a conflict between

the NLRA as we have interpreted it and the FAA, the FAA

would have to mandate the enforcement of Epic’s arbitration

clause. As we now explain, it does not.

A

Epic must overcome a heavy presumption to show that the

FAA clashes with the NLRA. “[W]hen two statutes are capable

of co-existence ... it is the duty of the courts, absent a

clearly expressed congressional intention to the contrary, to

regard each as effective.” Vimar Seguros, 515 U.S. at 533 (applying

canon to find FAA compatible with other statute)

(quoting Morton v. Mancari, 417 U.S. 535, 551 (1974)). Moreover,

“[w]hen two statutes complement each other”—that is,

“each has its own scope and purpose” and imposes “different

requirements and protections”—finding that one precludes

the other would flout the congressional design. POM Wonderful

LLC v. Coca-Cola Co., 134 S. Ct. 2228, 2238 (2014) (internal

citations omitted). Courts will harmonize overlapping statutes

“so long as each reaches some distinct cases.” J.E.M. Ag

Supply, Inc. v. Pioneer Hi-Bred Int’l, Inc., 534 U.S. 124, 144

(2001). Implied repeal should be found only when there is an

“‘irreconcilable conflict’ between the two federal statutes at issue.”

Matsushita Elec. Indus. Co. v. Epstein, 516 U.S. 367, 381

14 No. 15-2997

(1996) (quoting Kremer v. Chem. Const. Corp., 456 U.S. 461, 468

(1982)).

Epic has not carried that burden, because there is no conflict

between the NLRA and the FAA, let alone an irreconcilable

one. As a general matter, there is “no doubt that illegal

promises will not be enforced in cases controlled by the federal

law.” Kaiser Steel Corp. v. Mullins, 455 U.S. 72, 77 (1982).

The FAA incorporates that principle through its saving clause:

it confirms that agreements to arbitrate “shall be valid, irrevocable,

and enforceable, save upon such grounds as exist at

law or in equity for the revocation of any contract.” 9 U.S.C.

§ 2. Illegality is one of those grounds. See Buckeye Check Cashing,

Inc. v. Cardegna, 546 U.S. 440, 444 (2006) (noting that illegality

is a ground preventing enforcement under § 2). The

NLRA prohibits the enforcement of contract provisions like

Epic’s, which strip away employees’ rights to engage in “concerted

activities.” Because the provision at issue is unlawful

under Section 7 of the NLRA, it is illegal, and meets the criteria

of the FAA’s saving clause for nonenforcement. Here, the

NLRA and FAA work hand in glove.

B

In D.R. Horton, Inc. v. NLRB, the Fifth Circuit came to the

opposite conclusion.† 737 F.3d at 357. Drawing from dicta that

first appeared in Concepcion, 563 U.S. at 348, and was then repeated

in American Express Co. v. Italian Colors Restaurant, 133

S. Ct. 2304, 2310 (2013), the Fifth Circuit reasoned that because

class arbitration sacrifices arbitration’s “principal advantage”

† Because this opinion would create a conflict in the circuits, we have

circulated it to all judges in active service under Circuit Rule 40(e). No

judge wished to hear the case en banc.

No. 15-2997 15

of informality, “makes the process slower, more costly, and

more likely to generate procedural morass than final judgment,”

“greatly increases risks to defendants,” and “is poorly

suited to the higher stakes of class litigation,” the “effect of

requiring class arbitration procedures is to disfavor arbitration.”

D.R. Horton, 737 F.3d at 359 (quoting Concepcion, 563

U.S. at 348–52); see also Italian Colors, 133 S. Ct. at 2312. The

Fifth Circuit suggested that because the FAA “embod[ies] a

national policy favoring arbitration and a liberal federal policy

favoring arbitration agreements,” Concepcion, 563 U.S. at

346 (internal quotation marks and citations omitted), any law

that even incidentally burdens arbitration—here, Section 7 of

the NLRA—necessarily conflicts with the FAA. See D.R. Horton,

737 F.3d at 360 (“Requiring a class mechanism is an actual

impediment to arbitration and violates the FAA. The saving

clause is not a basis for invalidating the waiver of class procedures

in the arbitration agreement.”).

There are several problems with this logic. First, it makes

no effort to harmonize the FAA and NLRA. When addressing

the interactions of federal statutes, courts are not supposed to

go out looking for trouble: they may not “pick and choose

among congressional enactments.” Morton, 417 U.S. at 551.

Rather, they must employ a strong presumption that the statutes

may both be given effect. See id. The savings clause of the

FAA ensures that, at least on these facts, there is no irreconcilable

conflict between the NLRA and the FAA.

Indeed, finding the NLRA in conflict with the FAA would

be ironic considering that the NLRA is in fact pro-arbitration:

it expressly allows unions and employers to arbitrate disputes

between each other, see 29 U.S.C. § 171(b), and to negotiate

collective bargaining agreements that require employees to

16 No. 15-2997

arbitrate individual employment disputes. See 14 Penn Plaza

LLC v. Pyett, 556 U.S. 247, 257-58 (2009); City Disposal Systems,

465 U.S. at 836–37. The NLRA does not disfavor arbitration; in

fact, it is entirely possible that the NLRA would not bar Epic’s

provision if it were included in a collective bargaining agreement.

See City Disposal Systems, 465 U.S. at 837. (“[I]f an employer

does not wish to tolerate certain methods by which employees

invoke their collectively bargained rights, [it] is free

to negotiate a provision in [its] collective-bargaining agreement

that limits the availability of such methods.”). If Epic’s

provision had permitted collective arbitration, it would not

have run afoul of Section 7 either. But it did not, and so it ran

up against the substantive right to act collectively that the

NLRA gives to employees.

Neither Concepcion nor Italian Colors goes so far as to say

that anything that conceivably makes arbitration less attractive

automatically conflicts with the FAA, nor does either case

hold that an arbitration clause automatically precludes collective

action even if it is silent on that point. In Concepcion, the

Supreme Court found incompatible with the FAA a state law

that declared arbitration clauses to be unconscionable for lowvalue

consumer claims. See Concepcion, 563 U.S. at 340. The

law was directed toward arbitration, and it was hostile to the

process. Here, we have nothing of the sort. Instead, we are

reconciling two federal statutes, which must be treated on

equal footing. The protection for collective action found in the

NLRA, moreover, extends far beyond collective litigation or

arbitration; it is a general principle that affects countless aspects

of the employer/employee relationship.

This case is actually the inverse of Italian Colors. There the

plaintiffs argued that requiring them to litigate individually

No. 15-2997 17

“contravene[d] the policies of the antitrust laws.” 133 S. Ct. at

2309. The Court rejected this argument, noting that “the antitrust

laws do not guarantee an affordable procedural path to

the vindication of every claim.” With regard to the enforcement

of the antitrust laws, the Court commented that “no legislation

pursues its purposes at all costs.” Id. (quoting Rodriguez

v. United States, 480 U.S. 522, 525–526 (1987) (per curiam)).

In this case, the shoe is on the other foot. The FAA does

not “pursue its purposes at all costs”—that is why it contains

a saving clause. Id. If these statutes are to be harmonized—

and according to all the traditional rules of statutory construction,

they must be—it is through the FAA’s saving clause,

which provides for the very situation at hand. Because the

NLRA renders Epic’s arbitration provision illegal, the FAA

does not mandate its enforcement.

We add that even if the dicta from Concepcion and Italian

Colors lent itself to the Fifth Circuit’s interpretation, it would

not apply here: Sections 7 and 8 do not mandate class arbitration.

Indeed, they say nothing about class arbitration, or even

arbitration generally. Instead, they broadly restrain employers

from interfering with employees’ engaging in concerted activities.

See 29 U.S.C. §§ 157, 158. Sections 7 and 8 stay Epic’s

hand. (This is why, in addition to its being waived, Epic’s argument

that Lewis relinquished his Section 7 rights fails.)

Epic acted unlawfully in attempting to contract with Lewis to

waive his Section 7 rights, regardless of whether Lewis agreed

to that contract. The very formation of the contract was illegal.

See Italian Colors, 133 S. Ct. at 2312 (Thomas, J., concurring)

(noting, in adopting the narrowest characterization of the

FAA’s saving clause of any Justice, that defenses to contract

formation block an order compelling arbitration under FAA).

18 No. 15-2997

Finally, finding the NLRA in conflict with the FAA would

render the FAA’s saving clause a nullity. See TRW Inc. v. Andrews,

534 U.S. 19, 31 (2001) (noting the “cardinal principle of

statutory construction that a statute ought, upon the whole,

to be so construed that, if it can be prevented, no clause, sentence,

or word shall be superfluous, void, or insignificant”).

Illegality is a standard contract defense contemplated by the

FAA’s saving clause. See Buckeye Check Cashing, 546 U.S. at

444. If the NLRA does not render an arbitration provision sufficiently

illegal to trigger the saving clause, the saving clause

does not mean what it says.

Epic warns us against creating a circuit split, noting that at

least two circuits agree with the Fifth. See Owen v. Bristol Care,

Inc., 702 F.3d 1050, 1052 (8th Cir. 2013) (rejecting argument

that there is inherent conflict between NLRA/Norris LaGuardia

Act and FAA); Sutherland v. Ernst & Young LLP, 726 F.3d

290, 297 n.8 (2d Cir. 2013) (rejecting NLRA-based argument

without analysis); Richards v. Ernst & Young, LLP, 744 F.3d

1072, 1075 n.3 (9th Cir. 2013) (noting “[w]ithout deciding the

issue” that a number of courts have “determined that they

should not defer to the NLRB's decision in D.R. Horton”). Of

these courts, however, none has engaged substantively with

the relevant arguments.

The FAA contains a general policy “favoring arbitration

and a liberal federal policy favoring arbitration agreements.”

Concepcion, 563 U.S. at 346 (internal quotation marks and citations

omitted). Its “substantive command” is “that arbitration

agreements be treated like all other contracts.” See Buckeye

Check Cashing, 546 U.S. at 447. Its purpose is “to make arbitration

agreements as enforceable as other contracts, but not

more so.” Prima Paint, 388 U.S. at 404 n.12 (holding that FAA’s

No. 15-2997 19

saving clause prevents enforcement of both void and voidable

arbitration contracts). “To immunize an arbitration agreement

from judicial challenge on” a traditional ground such as

illegality “would be to elevate it over other forms of contract—a

situation inconsistent with the ‘saving clause.’” Id.

(applying same principle to fraud in the inducement). The

FAA therefore renders Epic’s arbitration provision unenforceable.

C

Last, Epic contends that even if the NLRA does protect a

right to class or collective action, any such right is procedural

only, not substantive, and thus the FAA demands enforcement.

The right to collective action in section 7 of the NLRA is

not, however, merely a procedural one. It instead lies at the

heart of the restructuring of employer/employee relationships

that Congress meant to achieve in the statute. See Allen-Bradley

Local No. 1111, United Elec., Radio & Mach. Workers of Am. v.

Wis. Employ’t Relations Bd., 315 U.S. 740, 750 (1942) (“[Section

7] guarantees labor its ‘fundamental right’ to self-organization

and collective bargaining.” (quoting Jones & Laughlin Steel, 301

U.S. 1, 33)); D. R. Horton, 357 N.L.R.B. No. 184, at *12 (noting

that the Section 7 right to concerted action “is the core substantive

right protected by the NLRA and is the foundation

on which the Act and Federal labor policy rest”). That Section

7’s rights are “substantive” is plain from the structure of the

NLRA: Section 7 is the NLRA’s only substantive provision.

Every other provision of the statute serves to enforce the

rights Section 7 protects. Compare 29 U.S.C. § 157 with id.

§§ 151–169. One of those rights is “to engage in ... concerted

activities for the purpose of collective bargaining or other mutual

aid or protection,” id. § 157; “concerted activities” include

20 No. 15-2997

collective, representative, and class legal proceedings. See

Eastex, 437 U.S. at 566; Brady, 644 F.3d at 673; D. R. Horton, 357

N.L.R.B. No. 184, at *2–3.

The Supreme Court has held that “[b]y agreeing to arbitrate

a statutory claim, a party does not forgo the substantive

rights afforded by the statute; it only submits to their resolution

in an arbitral, rather than a judicial, forum.” Mitsubishi

Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628

(1985). (Contrary to the Fifth Circuit’s assertion in D.R. Horton,

the Supreme Court has never held that arbitration does not

“deny a party any statutory right.” 737 F.3d at 357.)

Arbitration agreements that act as a “prospective waiver

of a party’s right to pursue statutory remedies”—that is, of a

substantive right—are not enforceable. Italian Colors, 133 S. Ct.

at 2310 (quoting Mitsubishi Motors, 473 U.S. at 637 n.19).

Courts routinely invalidate arbitration provisions that interfere

with substantive statutory rights. See, e.g., McCaskill v.

SCI Mgmt. Corp., 285 F.3d 623, 626 (7th Cir. 2002) (holding unenforceable

arbitration agreement that did not provide for

award of attorney fees in accordance with right guaranteed

by Title VII); Kristian v. Comcast Corp., 446 F.3d 25, 48 (1st Cir.

2006) (holding unenforceable arbitration provision precluding

treble damages available under federal antitrust law);

Booker v. Robert Half Int'l, Inc., 413 F.3d 77, 83 (D.C. Cir. 2005)

(holding unenforceable and severing clause in arbitration

agreement proscribing exemplary and punitive damages

available under Title VII); Hadnot v. Bay, Ltd., 344 F.3d 474, 478

(5th Cir. 2003) (same); Morrison v. Circuit City Stores, Inc., 317

F.3d 646, 670 (6th Cir. 2003) (holding unenforceable arbitra-

No. 15-2997 21

tion agreement that limited remedies under Title VII); Paladino

v. Avnet Computer Techs., Inc., 134 F.3d 1054, 1062 (11th

Cir. 1998) (same).

Epic pushes back with three arguments, but none changes

the result. It points out the Federal Rule of Civil Procedure 23

simply creates a procedural device. We have no quarrel with

that, but Epic forgets that its clause also prohibits the employees

from using any collective device, whether in arbitration,

outside of any tribunal, or litigation. Rule 23 is not the source

of the collective right here; Section 7 of the NLRA is. Epic also

notes that courts have held that other employment statutes

that provide for Rule 23 class actions do not provide a substantive

right to a class action. See, e.g., Gilmer v. Interstate/Johnson

Lane Corp., 500 U.S. 20, 26 (1991) (Age Discrimination

in Employment Act (ADEA)); D.R. Horton, 737 F.3d at

357 (citing court of appeals cases for FLSA). It bears repeating:

just as the NLRA is not Rule 23, it is not the ADEA or the

FLSA. While the FLSA and ADEA allow class or collective actions,

they do not guarantee collective process. See 29 U.S.C.

§§ 216(b), 626. The NLRA does. See id. § 157. Epic’s third argument

is that because Section 7 deals with how workers pursue

their grievances—through concerted action—it must be

procedural. But just because the Section 7 right is associational

does not mean that it is not substantive. It would be odd

indeed to consider associational rights, such as the one guaranteed

by the First Amendment to the U.S. Constitution, nonsubstantive.

Moreover, if Congress had meant for Section 7 to

cover only “concerted activities” related to collective bargaining,

there would have been no need for it to protect employees’

“right to ... engage in other concerted activities for the

purpose of collective bargaining or other mutual aid or protection.”

29 U.S.C. § 157 (emphasis added).

22 No. 15-2997

Because it precludes employees from seeking any class,

collective, or representative remedies to wage-and-hour disputes,

Epic’s arbitration provision violates Sections 7 and 8 of

the NLRA. Nothing in the FAA saves the ban on collective action.

The judgment of the district court is therefore AFFIRMED.